Because animal rights groups make it difficult for drug companies to build or expand animal-testing laboratories in the United States, Europe, and India, Rice, chief executive of Bridge Pharmaceuticals Inc., is outsourcing the work to China, where scientists are cheap and plentiful and animal-rights activists are muffled by an authoritarian state.

“This is a country with a large number of canines and primates, and if we establish pre-clinical testing facilities here, we can change the dynamics of the industry,” said Rice, who in 2004 created his San Francisco-based company out of the life sciences department at the Stanford Research Institute in Menlo Park, Calif. “Animal testing also does not have the political issues it has in the US or Europe or even India, where there are religious issues as well,” he said. “So now big pharma is looking to move to China in a big way.”

Beijing is fast becoming China’s leading biotechnology center, and Bridge, located in the lush sprawl of the city’s Zhongguancun Life Science Park, was given “big benefits and a 5-year tax holiday” for choosing the capital as its home, Rice said.

“But beyond that, it’s the whole menu of advantages that attracted us,” said Rice, who now alternates weekly between Beijing and San Francisco. “In terms of animal supply, China is a good place to be, as it is the world’s largest supplier of lab monkeys and canines — mostly beagles.”

Large drug companies such as Novartis, Pfizer, Eli Lilly, and Roche have disclosed plans to set up research and development centers in China. But the real growth is likely to come from mid-sized companies that outsource their animal testing or pre-clinical trials to companies such as Bridge, which can offer them prices that are about half of those charged by US-based competitors. By 2008, that could double the size of the pre-clinical outsourcing industry, which was worth $2 billion last year, Rice said.

Outsourcing research to China will also benefit people suffering from so-called orphan diseases, illnesses that afflict small numbers of people.

Given the steep cost of drug development and the steeper rates of failure, “unless there is a market of about $500 million a year for a drug, big pharma companies will not invest in it,” Rice said. With China’s lower costs, he said, “it becomes feasible to develop drugs for orphan diseases.”

Despite such benefits, the subject of animal testing is a difficult one. US regulations generally require that all drugs be tested on at least two species, usually rats and then dogs or monkeys, before being submitted for approval by the Food and Drug Administration. Bridge’s Beijing facilities have been designed to meet US standards on animal care, and it expects to be certified as such by the end of the year. Air and water quality are carefully monitored, and the cages are regularly cleaned.